Spinoffs Fared Poorly in 2021 as Victoria's Secret, Vimeo, and Organon Slumped | Barron's

Text size A Victoria’s Secret store in New York. The lingerie chain was spun off by L Brands in July. Nina Westervelt/Bloomberg It wasn’t a banner year for spinoffs in 2021, as 17 of 19 newly jettisoned companies finished in the red, according to Spinoff Advisors, a Chicago firm that tracks the market. Spinoffs historically have generated market-beating returns and the 2020 crop included winners like Carrier Global (ticker: CARR) and Otis Worldwide (OTIS).  Last year’s losers included Organon (OGN), which was jettisoned by Merck (MRK); Vimeo (VMEO) from IAC/InterActiveCorp (IAC); Kyndryl Holdings (KD) from IBM (IBM) and Victoria’s Secret (VSCO) from Bath & Body Works (BBWI). There were some big declines in a year when the S&P 500 returned 28.7%. Vimeo, which allows users to create videos, fell 61.1% from its May spinoff until Dec. 31 while Lucid Diagnostics (LUCD) was the worst of the group, with a drop of 61.9% from its split in October. The only two winners were GXO Logistics (GXO), which gained 44%, and DT Midstream (DTM), which was up 14.2%. Joe Cornell, the founder and CEO of Spinoff Advisors, tells Barron’s that the 2021 performance isn’t unusual since spinoffs have historically underperformed the market…
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